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Dubai Catches the COLD ????

Discussion in 'Dubai property' started by askfind, Oct 4, 2008.

  1. askfind

    askfind New Member

    I just got this.. Can anyone confirm, if Dubai has caught the cold.
    ARE the wheels coming off Dubai? Momentum in the spendthrift emirate certainly looks to be grinding to a halt. Last week, Dubai received a US$15 billion bailout from Abu Dhabi, its cash-rich big sister. At least that's how the lending facility set up by the UAE central bank is being privately interpreted. It's just one of a number of warning signs

    A year ago, Dubai was running at full-speed. Everything was going up, fast - cranes, new buildings, property prices. Such was the froth, bankers in London were using their bonuses to speculate on Dubai's luxury water front condos, buying one week and selling the next. But now that's an unprofitable game.
    Dubai has caught the credit cold. In just three months, the spread on Dubai's credit default swaps have doubled to 300 basis points - to almost three times that of Abu Dhabi.
    It's no secret Dubai is resource poor, with just 6 per cent of its GDP coming from oil and gas. Yet, while none of the UAE states have official credit ratings, global banks have until now freely granted credit to Dubai as if it had the same black-gold backstop as Abu Dhabi.
    In the downturn, commodity-scarce Dubai is being forced to face financial reality. Lenders no longer assume its state-backed entities are so credit worthy. Property developer Nakheel is understood to have suddenly found that refinancing its huge US$3.5 billion debt mountain will be more expensive. Elsewhere, construction of the world's largest airport is thought to be behind schedule, and other large island projects postponed.

    Glossy international investments are also being rethought. Dubai Financial Group isn't expected to help Marfin, the Greek investment group in which it owns a 17 per cent stake, to raise the five billion euros (S$10 billion) it needs.

    Similarly, Dubai International Capital looks to have taken its eye off Liverpool Football Club. Instead, capital tied up in existing assets will be redeployed to strengthen balance sheets where it's most needed.

    No one is yet suggesting Dubai will collapse under its debt strain. Despite sibling rivalry, it's understood Abu Dhabi would always act to avert a crisis. But last week's lending facility serves as a clear whisper down the corridor telling Dubai to slam on the brakes.
  2. jordandvdj

    jordandvdj New Member


    Yes, its all gone wrong - NOT

    Do you really think it can melt down just like that.

    The debt you speak of is covered through the billions invested. The likes of nakheel have increased sales by a factor of three.

    If it was all so fragile do you think the banking world would have invested trillions of dollars.

    The facility is liquidity as it cannot be found in the west and abu dhabi would rather bet on dubai than wall street.

    By the way some of the biggest investors in dubai are from abu dhabi. until recently it was the only place they could own land - still is in terms of freehold - near home. No land for sale in abu dhabi, leasehold only at the moment.
  3. Roshan

    Roshan New Member

    Abudhabi has oil but lacks the foresight which Dubai has had for the last couple of decades. Don't forget Dubai came out with the areas first free zone and modelled it in such a way for others to follow.

    Dubai has never depended on oil and has divesified into trade, tourism. The economy does not depend on oil alone. Some say oil would hit 500 USD in the coming years and some say that it could also go down to 80 USD. With alternative fuels in the horizon, oil might not be the only answer to energy.

    Dubai has gone down the freehold line but Abudhabi is still leasehold as correctly put. Abudhabi might have the cash but are very possesive about foriegners coming and occupying land.

    When Abudhabi came into the property market, the expectations were high - but that was killed when the prices started on a price where Dubai ended...or seemed to end.

    The question remains is, will most of us pay Dhs 2 to 2.5 million to stay in a 1000 sq ft 1 BDR house which are currently the going rates....I don't think so.

    Basically Abudhabi is enjoying the fruits because it's a flippers market. Compare it a game of musical chairs where the parcel falls into ones hand and the music stops and he is left to bear the brunt of an unwise investment.

    Abudhabi will continue to be a flippers market and that will stop when the music stops. This is how I look at it...could be wrong.


  4. jordandvdj

    jordandvdj New Member


    I really thought about abu dhabi but regardless of the what is happening it is right now and for another 3 years - a S*** hole and the price is stupid.
  5. rudeboy

    rudeboy New Member

    heheh i agree prices have gone nuts. it doesnt make sense buying one bedroom for 1.5 million dhs. do the maths for that much money you could buy a 4 bedroom house in England.

    having said that dubai is the place to be right now. y? in my opinion it is a great place to run a business cos of little tax as compared to UK. but it all depends on the expenses.

    Salik has already got most of ppl in dubai cheesed off does that mean they will leave?
  6. Roshan

    Roshan New Member

    Dubai has caught a cold because USA has sneezed. As they all say, when USA sneezes, the world catches a cold :D


  7. georgihh

    georgihh New Member

    At least the dollar is going up. Looks like they have the medicine.
    As far as the dollar is going up we are OK
  8. PropGuy

    PropGuy New Member

    We are not ok with $ going up. With the $ up, UAE becomes more expensive internationally, but it depends from who's pov you are looking at. It might be good for people who have to live here since, imports become cheaper so you see prices on the shelf going down for many products (that depend on the retailers if they drop the prices with reduced prices on imports). People who have properties on rent would get more real value. Expats would send more money back home to their families excluding expats from US.

    Stock market is directly tied to the value of currency since it is purely yield based investment, so UAE stock market could pick up.

    But buying new properties in UAE would become more expensive. But this is all part of economic cycle and it is turning favor toward ready (or soon to be ready) properties. Flipping on off plan properties would lose attraction.
    Last edited: Oct 7, 2008
  9. Investoman_uae

    Investoman_uae New Member

    LOL Are you comparin Dubai to England? Lisen mate, i am British living in UAE ok? And I tell you ...this comparison doesnt work.

    You can guy a 6 bedroom house in UK for that amount if the property is up north somewhere in yorkshire or liverpool. .. where houses get broken into, u have chavs all over the place nickin cars ... and on top of that.... the pound is sht right now... 6.5 to the pound?. .. soon I will buy some flats in the middle of chelsea :D

    Anyways.... Dubai will continue to be the location of LUXURY LIVING. I agree prices are too high but this is why there is a bloody correction. Those who buy NOW will not be able to flip until a long time ....

    So prices will remain stable and will see small capital appreciation over the next few years.... and this will force the speculators out and bring in end users or people who actually want to live here.

    This market will NOT crash... i repeat it will NOT crash.... there is strong backin from all sides to keep it goin and demand will continue to grow cos face it everyone wants to live here... it offers a type of life style that doesnt exist anywhere else.

  10. Investoman_uae

    Investoman_uae New Member

    This is funny LOL cos whoever reads this will think that Dubai is in recession and that we are seein an AIG type bail out here. Its not true.

    There is a problem, i am not saying there isnt... and the market is hitting the ceilin right now in terms of prices and supply.... however... things will slow down... and this was inevitable... thats what happens at the end of a boom. . . .thankfully it will not crash and i am very confident it wont.

    But it will slow down and no more flippin properties for quick cash.

  11. rudeboy

    rudeboy New Member

    well am a british expat living in uae now. we bought a 4 bedroom house in south east england in bucks county about 7 years ago for £200,000 = 1.4 million dhs. the rent we get is approx 100,000dhs per year.

    i agree dubai is safer compared to UK but the crime rate is slowly increasing in UAE especially in run down areas like satwa etc. you get to hear more about drugs being tried to smuggled into uae. but still it is safe compared to uk.

    having said that i just think that the prices are crazy thats all. it doesnt make sense. I luv dubai and i think it is better compared then uk for various reasons. luckly i was able to pick up a 3 bedroom villa in abu dhabi 2 to 3 years ago for 1 million dhs, when the prices werent crazy.

    dubai is the place to live in as it has many opportunities.
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